As performance metrics and worries about Brexit pinch top-line revenue, the discipline of revenue management is focusing on upselling, targeting guests much better and avoiding ludicrously expensive hotel transportation options.
Last Tuesday I attended the one-day Revenue Management and the Connected Customer conference organized by Revenue by Design at the Hilton London Bankside, a property literally one minute from the London office of Hotel News Now and parent STR, overlooking the Tate Modern museum.
The conference was very well-attended, and if I was asked to suggest the major two messages coming out of it, I would suggest they would be 1) upsell more intelligently and targeted, and 2) consolidation is coming to the world of system platforms that underpin revenue management.
This thinking might have been relayed to me as many of the attendees are directly responsible for bringing in more revenue. Brands, of course, might look at the numbers in relation to top-line revenue, while owners of course will prefer to glance down at the bottom line.
Rob Paterson, CEO of Best Western Hotels & Resorts (Great Britain), a former revenue manager who also worked for a capital fund, said he believed two things held the discipline back: The first is that of a legacy mindset; the second is that there is a lack of compelling return-on-investment criteria in revenue management for shareholders to invest in.
“The analytical still needs to be there, but creativity is the next step that we need to develop,” Paterson said. “A lot of hotel companies have lost track that they need to add value for the owners. If decisions do not have correct ROIs attached to them, it is the owners who have to pick up the pieces.”
Paterson remarked on two developments he saw as being disruptive in the next couple of years:
“OYO (Rooms)’s move into Europe will be disruptive, but in a good way,” Paterson said, referring to the super-budget Indian hotel firm that opened its first property in 2013, now has 8,500 rooms under management and is looking to grow out of the Indian sub-continent.
His other concern was the thorny issue of hiring.
“Revenue-manager recruitment, I think, is second to chefs in the difficulty of filling gaps,” Paterson said.
The general consensus at the conference was that data was becoming more streamlined, targeted and revealing.
Here are some quotes heard from various sources at the Revenue by Design conference, all on the topic of how data in the industry continues to evolve:
“Upselling used to be an afterthought, but now … it should be a key component of any broad revenue strategy, inherently a way of creating guest satisfaction.”
—Jason Bryant, founder and CEO, Nor1.
“Look at ways that guests would want to pay for loyalty above the regular loyalty programs, and then look at partnerships. We need to ask guests ‘what is the sentimental value of our hotel?’ Upselling is not a bottle of Champagne anymore.”
—Nick Fletcher, director of loyalty at business consultancy The Collinson Group.
“We have found that 10 a.m. is the best time for (upselling) conversion for business travelers, while 1 p.m. is the best for leisure travelers, which also is the worst for business travelers.”
—Erik Tengen, co-founder, Oaky.
“You will begin to offer the right thing to the right person. More and more guests are expecting to be upsold at the time of the booking and on reaching the property.”
—Manuel Grünenfelder, regional director, revenue and distribution, Highgate Hotels.
… But it does not always work out perfectly, Grünenfelder said.
“In Belize, I was asked ‘would you like a helicopter ride? It’s $4,000,’” Grünenfelder recounted. ‘No, thank you,’ I replied.”
All in all, a very worthwhile conference.
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